Huazhu Target Raised as Q4 EBITDA Jumps 83%

Q4 Adjusted EBITDA Explodes 83% Beating Expectations

Huazhu Group reported robust fourth-quarter 2025 financial results that surpassed its own guidance and market forecasts, triggering a positive analyst revision. On March 20, Macquarie Research raised its price target for the company's Hong Kong shares (01179.HK) to 48 HKD and its U.S. shares (HTHT.US) to $62. The upgrade followed the release of Q4 earnings, where revenue increased 8.3% year-over-year to RMB 6.5 billion ($933 million), beating the company's guided range of 2% to 6% growth. Profitability saw a more dramatic improvement, with adjusted EBITDA soaring 83% to RMB 2.2 billion ($313 million) from RMB 1.2 billion in the same quarter last year.

The strong bottom-line performance was driven by a return to positive RevPAR (Revenue Per Available Room) growth and operational efficiencies. Full-year 2025 revenue climbed 5.9% to RMB 25.3 billion, while net income attributable to the company grew 66.7% to RMB 5.1 billion ($726 million).

Asset-Light Model Boosts Operating Margin to 29.1%

Huazhu's strategic pivot to an asset-light business model is proving highly effective, directly contributing to enhanced profitability. Revenue from the company's manachised and franchised (M&F) hotels grew 21% year-over-year in the fourth quarter, a stark contrast to the 3.2% decrease from its capital-intensive leased and owned hotels. This shift was a key driver behind the group's operating margin expanding to 29.1% in Q4, a significant jump from 15.0% in Q4 2024.

The company's European business, Legacy-Deutsche Hospitality (DH), also executed a successful turnaround, posting a record adjusted EBITDA of approximately RMB 500 million for the full year 2025. This was achieved through cost reductions, lease renegotiations, and portfolio optimization, contributing positively to the group's overall earnings.

Company Guides for 2-6% Revenue Growth, Adds $400M Dividend

Looking ahead to 2026, Huazhu's management projects continued expansion, guiding for total revenue growth of 2% to 6%. The company plans to accelerate its network growth, expecting to open approximately 1,600 new hotels according to management forecasts provided to Macquarie. This aligns with its official guidance of opening 2,200 to 2,300 hotels while closing 600 to 700, implying net network growth of around 12%. The high-margin M&F business is expected to lead this growth, with its revenue projected to increase by 12% to 16%.

Reflecting its strong cash flow generation, the company announced a cash dividend of $400 million for the second half of 2025. This brings the total shareholder return for the full year to approximately $760 million, including previous dividends and share repurchases. Alongside the financial results, Huazhu announced that Arthur Yu will be appointed as the new Chief Financial Officer, effective March 18, 2026.